Fulgent Genetics Earnings Miss
Fulgent Genetics Posts Q2 Loss, Misses Revenue, Cuts Guidance Amid Headwinds
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Key Points
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Q2 revenue rose about 4% year over year to $85.4 million but also posted a roughly 20% sequential lift, driven by the Bako Diagnostics and StrataDx integration, with Anatomic Pathology revenue growing strongly as a result of that acquisition.
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Gross margins compressed meaningfully: GAAP gross margin was 30.1% and non-GAAP gross margin 31.3%, down from 42.1% and 44.2% respectively a year earlier.
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The company held about $551.5 million in cash, cash equivalents, restricted cash and marketable securities, and noted a delayed roughly $106.1 million tax refund; during the quarter it repurchased about 1.5 million shares for $23.8 million (year to date buybacks amount to about 4.1 million shares).
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Revenue from Fulgent’s largest customer declined by about $4.6 million sequentially as the customer moves testing in-house, with management signaling further declines in the second half even as acquisition revenue offsets some of the loss.
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In addition to the quarterly data, management signaled near-term catalysts for its therapeutic programs, noting an FDA end-of-Phase-II meeting planned later this summer and a goal to begin a Phase III registration trial in the first half of 2027 for FID-007.
Fulgent Genetics posted a rough second quarter, reporting revenue of $85.4 million and a net loss of $29.5 million, sending its stock down 18% to $16.55 Simply Wall St. The results missed analyst estimates, and the company cut its full-year revenue outlook to $330–340 million Watchlist News.
Despite the top-line miss, revenue rose about 4% from a year ago and jumped roughly 20% from the prior quarter. The gains came largely from two recent acquisitions: Bako Diagnostics and StrataDx, which together added about $16.9 million in Q2 revenue Watchlist News.
Gross Margins Collapsed as Costs Climbed Higher
Fulgent's profit margins fell sharply compared to a year ago. Its GAAP gross margin dropped to 30.1%, down from 42.1% a year earlier. The non-GAAP gross margin also fell, from 44.2% to 31.3% Simply Wall St. Higher operating costs and a slow billing-system transition were key culprits.
The billing problems caused delays in collecting revenue — a process called revenue-cycle management. Management cited this transition as a major near-term headwind. The company also missed the earnings consensus of -$0.58 per share, according to Watchlist News, posting a negative net margin of 23%.
Largest Customer Pulls Testing In-House, Hurting Revenue
Revenue from Fulgent's biggest customer fell by about $4.6 million from the prior quarter. That customer is moving its genetic testing operations in-house, reducing what it buys from Fulgent. Management warned that this trend will continue through the second half of the year Gurufocus.
The Bako and StrataDx acquisitions are expected to offset some of that lost revenue. Anatomic Pathology — the segment tied to those deals — grew strongly in Q2. But the departure of a large customer creates a gap that new business must fill quickly to hit full-year targets.
Guidance Cut and a $106 Million Tax Refund Still Waiting
Fulgent trimmed its full-year revenue guidance to $330–340 million. It also guided for a non-GAAP loss per share of $2.22 to $2.35 for fiscal 2026 Watchlist News. That compares unfavorably to prior analyst consensus expectations.
The company ended the quarter with about $551.5 million in cash and securities — a strong balance sheet. But it is still waiting on a roughly $106.1 million tax refund that has not yet arrived. During Q2, Fulgent bought back about 1.5 million shares for $23.8 million, bringing year-to-date repurchases to about 4.1 million shares Simply Wall St.
AI Tools and FID-007 Drug Trial Offer a Longer-Term Story
Management pointed to its AI portfolio and digital pathology work as signs of future growth. The company reported Phase II data for its cancer drug FID-007. An FDA end-of-Phase-II meeting is planned for later this summer Gurufocus.
If that meeting goes well, Fulgent aims to start a Phase III registration trial — the final step before seeking drug approval — in the first half of 2027. Analysts note the challenge: turning modest revenue growth into real profits remains difficult with a weaker near-term outlook in view Simply Wall St.
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